Guernsey’s Economy – Growth Continues

9th January 2020

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Overall the picture is one of continuing increase in the size of the workforce and GDP growth, driven primarily by the finance sector and professional services supported by small growth in the population. More domestically-facing sectors of the economy have had greater challenge.

The data shows that GDP (a measure of the total size of the Island’s economy) continued to grow in real terms in 2018 by 1.7%. The growth in GDP in 2016 and 2017 has also been revised up to 3% and 4.6% respectively as more data has become available. Secondary economic indicators such as employment and earnings suggest that GDP continued to grow in real terms through 2019 but that, when official estimates are published in the summer, they may show a slower rate of growth than the three previous years. Both UK and global growth rates are expected to be slightly less strong in 2020 and this should reflect positively on economic conditions in Guernsey as the year progresses.

The population has begun to grow after several years of decline. Annual population growth rates accelerated at the end of 2018 as a result of fewer people moving away from the Island, but the total size of the population remains about 240 people smaller than it was at its peak in 2011. The birth rate in Guernsey remains lower than its norm and there are fewer births than deaths per year which is exerting a downward pressure on the population.

Conditions in the property market have stabilised. The total number of local market properties sold in the year has increased and there had been some slight real increases in local market house prices in the third quarter of 2019 compared to a year earlier. Prices remain significantly lower in real terms that at their peak in 2013. It has meant that both buying and renting property in Guernsey has become more affordable. While still expensive relative to UK averages, the ratio of the average purchase price of a property to median earnings has fallen from 15.2 in 2013 to 12.6.

Median earnings have increased in real terms by 0.9%, with Guernsey’s extremely low unemployment levels meaning there is demand and competition for workers; and the participation rate, which is a measure of those who are economically active, at 78%, remains very strong.

Employment in the Finance sector continued to grow year on year to June 2019 as did employment in professional and business services and information and communication. However, employment in more domestically focused sectors such as construction and retail declined slightly over the same period.

“There are a lot of positive signs for our economy and particularly, the growth in GDP and growth in Islanders’ earnings are very welcome. The small increase in our population size as a result of people moving to the Island, and fewer people leaving, is also a good sign and reflects the attractiveness of Guernsey as a place to live and work for those supporting our economy and community. This performance doesn’t just happen but is as a result of a number of years of effort and discipline and the maintenance of our stability. This has created the right conditions for a positive economic environment. However, we cannot take this for granted and assume it will continue. As a small, open economy, we remain more vulnerable than large economies so there is no room for complacency.”

The economic data contained in this bulletin should be considered alongside the broader measures of wellbeing included in the OECD Better Life Indicators Report published in December 2019. Combined, these reports provide a more rounded view of all aspects of life in Guernsey.